darcy kincaid

SPY - A Long Term Perspective for investors and trades

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This is a very important level for the market as the Long Term Short that has been in play since March 2012 is at the failure point. Not coincidentally this is of course occurring on a Friday afternoon, when many market participants would prefer to be taking off for the weekend.

As we have been stating since March 2009, we see no viable outcome for the market other than a long term "recovery", meaning in this instance that the market must break new highs in order to prevent a complete meltdown of the "economy". We correctly have been stating since August of 2011 during the retrace that we expected a new intermediate high in 2012 and that is what has occurred in the last few days.

Normal market activity would be a price above the top of the Short entry range, a pullback, and then a resumption of the upward trend before an all-time high is reached. Any negative or positive news from FED of ECB will of course have an outsize effect on price action from this point forward. As would other fundamental factors not now known.

If the LT             Swing Short is definitively broken, frenzied short covering could propel this market to the identified 2nd target area very quickly, perhaps in as little as 2 days. Conversely a prolonged struggle over this area could result from a lack of sufficient bullish catalyst if determined short sellers reenter at this price level.

We reiterate that at this point we see nothing from a technical standpoint to preclude a new all-time high, possibly before March 2013             . Don't underestimate the election cycle effect, for good or bad.

As always, all personal views aside, we trade what we see on the chart, not what we wish. Charts don't lie.

Trade safe.
Thank you for the idea. Really interesting analysis especially considering that most of the people here looking for short.
Appreciate the feedback.

We have been bullish on the market for 3 1/2 years and see no technical or fundamental reason to change that view.

As we state in the comments, we expect a shorting opportunity to materialize soon, but only as a counter trend trade.

Of course, the challenge is to identify how deep the retrace will be before the resumption of the LT trend.

Our specialty is in identifying the price targets and levels that have a high probability of market reaction. The devil is in the details.
hello darcy, you're exactly right......."As always, all personal views aside, we trade what we see on the chart, not what we wish. Charts don't lie"....... This should be the #1 rule for the technical trader. I see to many charts in this forum with personal comments opposite of what the chart is saying. I suggest all you technical traders out there, PRINT this rule in large fonts and stick it on your wall.

Thanks for your reply.
Looks like QE3 helped a lot. Can you please comment on if the market is currently "Super over-bought" or not. and continue to do so !?
Many refer to "overbought" and "oversold" in the context of oscillators such as an RSI or MACD/Stochastics signal. Is that what you are referring to?
DevD darcy kincaid
Great information on the chart. Definitely dig your analysis.

Yes. imo over-bought is the current situation anyways. in your opinion, are you expecting pullback/consolidation after reaching 2nd intermediate long swing target? If so, how much.
Our reply is probably going to disappoint you as we never base any trading decision on oscillators or studies. We at times consider them only to gauge what the reaction of those who use them is likely to be in a certain situation.Divergences in oscillators and studies often continue for an extended period of time and we consider them unreliable and unsatisfactory. Others may strongly disagree.

Our analysis and experience shows conclusively that market reaction to the 2nd target is always the most important level to consider, on all time frames. That is what we refer to as the "market target" as opposed to an intermediate profit-taking target along the way.

Generally speaking, we expect a pullback after the 2nd target is reached, but that depends on various factors. The longer the time-frame of the analysis, the longer a reaction or lack thereof may take.

We have pullback targets identified as well as the next target in trend if the 2nd target is reached. We will look for an opportunity to post our analysis regarding them next week.
DevD darcy kincaid
Thanks for the clarification. It did help me understand the analysis. :-)
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